Florida's high jobless rate causes another drop in consumer confidence
GAINESVILLE, Fla. — Florida’s consumer confidence fell in March by three points to 70 as the state’s bleak unemployment rate cast doubts about the long-term health of the economy and people’s ability to make major household purchases, according to a new University of Florida survey.
“The decline in optimism is almost certainly related to persistent elevated levels of unemployment in Florida and the perception that jobs are neither secure nor widely available,” said Chris McCarty, survey director of UF’s Bureau of Economic and Business Research.
New unemployment figures released this week show Florida’s jobless rate for February was 12.2 percent, the highest since the state began keeping count in 1970. It exceeded the previous record of 11.9 percent set in both May 1975 and January of this year.
Most economists expect Florida’s unemployment to continue to rise over the next several months, in contrast to national unemployment, which has at least temporarily declined, McCarty said. The national unemployment rate was 9.7 percent in February, 2.5 percent lower than in Florida.
Two of the five components making up the index rose, one stayed the same and two declined.
The biggest change was in the component measuring perceptions of whether it is a good time to buy big-ticket consumer items, which fell 10 points to 72.
Perceptions of personal finances now compared with a year ago rose one point to 54, while expectations of personal finances a year from now remained unchanged at 83. Perceptions of U.S. economic conditions over the next year rose two points to 70, while perceptions of U.S. economic conditions over the next five years fell four points to 72.
“While we had expected a decline in overall consumer confidence in March, the source of the decline was unusual,” McCarty said. “Personal finances seem to be stabilizing, although at historically low levels. Short-term expectations of the U.S. economy are a bit more optimistic. But Floridians are skeptical of the long run health of the economy and are particularly negative about investing in major purchases, such as a car or large appliance that are often purchased through a loan or on credit.”
A disturbing trend is the elevated levels of the long-term unemployed, those who are looking for work but have not found a job for 27 weeks or more, McCarty said. These Floridians are dependent on extended unemployment benefits and continue to add to the rolls of Medicaid recipients, he said.
Although state level estimates for the long-term unemployed are not available on a monthly basis, an annual comparison to the United States as a whole for 2009 shows Florida at 37.2 percent and the U.S. at 31.5 percent, he said.
The latest figure for the U.S., available in February, shows that 40.9 percent of jobless adults have been out of work for 27 weeks or more, McCarty said. “Based on last year’s statistics, I’m assuming Florida’s long-term unemployment rate for early this year would be proportionately higher than the national rate, close to 47 percent,” he said.
These levels, both statewide and nationally, are much higher than has ever been measured, he said.
“The challenge for the Florida economy is to recover the jobs lost during the recession,” McCarty said. “While the stimulus is helping restore jobs in other states, Florida’s economy is overly dependent on construction, real estate and services surrounding steady population growth, particularly from in-migration.”
Population growth for Florida was negative in 2009 for the first time since World War II, McCarty said. At the same time, out-migration has increased, possibly due in part to the exodus of construction workers who are seeking work elsewhere, he said.
“The hope is that population growth will follow the pattern it has in past recessions and will pick up again this year,” he said. “If that does not happen, then Florida will struggle to regain many of the jobs lost during this recession.”
The research center conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for March was collected from 418 responses.